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About Me

Thean Eu

Greetings. I'm a journalist from Business Times Malaysia.
Despite the global economic slowdown, the telecommunications industry, in general, continues to capture the imagination with its potential for one billion new subscribers decades to come.
Broadband Internet penetration rates continue to rise while the impending introduction of next generation mobile services promises to revitalize a mobile market that has already reached saturation levels in a number of countries.
Hopefuly this blog will provide a unique platform for the sharing of ideas and experience from all sectors of the telecommunications and information technology industries – policy, regulatory, economic and development issues – to meet the challenge of strengthening the information society locally and other countries.

Tuesday, January 27, 2009

ETISALAT Telecommunications Corp, which won a mobile spectrum in Iran via a consortium recently, said it will invest as much as US$5 billion in the country over the next five years.

The company, which won the international tender with Tamin Telecom, would spend US$1 billion on network within the first year.

Based on Wireless Intelligence's number, Iran has a mobile penetration rate of about 61 per cent, representing more than 44 million of its population.

Although being a latecomer into the Iran market, there should be plenty of growth opportunities for Etisalat. So far, the other players in the market include state-owned Iran Telecommunication Company (TCI) and Irancell, which is 49 percent owned by MTN Group.

The phone company said that the acquisition would be completed first quarter this year.

"Closing is subject to certain conditions being fulfilled, and Telenor now anticipates that closing of the transaction will take place during the first quarter of 2009," Telenor ASA said in a statement.

The company, which was expected to seal its Indian acquisition deal by end 2008, had announced last month that it would "meet the conditions" by end January 2009. It appears highly unlikely it can seal the deal before end January.

Friday, January 23, 2009

India's number one mobile operator Bharti Airtel Ltd, controlled by Tycoon Sunil Mittal and more than 30 per cent owned by Singapore Telecommunications Ltd, reported a third quarter net profit of 21.6 billion rupees (US$442 million), an increase of 26 per cent.

Its sales for the quarter, ended December 31 2008, rose to 96.3 billion rupees, against 69.6 billion same period a year ago.

Besides retaining the pole position, Bharti also managed to widen its market share, from 24.19 per cent in June to 24.69 per cent in December.

In contrast, its closest rival, Reliance Communications Ltd, lost its ground. Its market share has been eroding over the past few months, it shed marginally to 17.68 per cent, from 17.77 per cent three months ago.

Just one day after Bharti announced its third quarter numbers, Reliance told investors that its net profit grew by only 2.7 per cent to 14.1 billion rupees (US$286 million).

THE Telecom Regulatory Authority of India, just a couple of days ago, announced its December figures.

For the industry in general, it registered more than 60 million new subscribers in the second half alone. It ended the year with 346.8 million subscribers.

As expected, the top six operators remained the same, lead by Bharti Airtel (24.69%), followed by Reliance (17.68%), Vodafone Essar (17.57%), BSNL (13.33%), Idea (9.86% ) and Tata Teleservices (9.16%).

While most of the operators gained market share in the fourth quarter of 2008, there are four operators that lost market share during the quarter. They were (in no particular order):

1. Reliance -- December (17.68%) November (17.73%) October (17.75%) September (17.77%)2. Tata -- December (9.16%) November (9.23%) October (9.26%) September (9.30%)3. MTNL -- December (1.21%) November (1.22%) October (1.24%) September (1.26%)4. BSNL -- December (13.33%) November (13.47%) October (13.69%) September (13.91%)

With new player like Telenor's Unitech coming into the field this year, it will certainly put more pressure on the four players to perform better.

Thursday, January 22, 2009

THE second biggest mobile operator in Saudi Arabia Etihad Etisalat Co (Mobily) recorded a 51 per cent increase in its fourth quarter net profit.

Net profit jumped from 514 million riyals to 778 million riyals ($US207 million). Shareholders will also receive a dividend of 0.75 riyals a share.

This is in contrast with Saudi Telecom Co, the biggest phone company in the country, saw its fourth quarter net profit fell by 62 per cent, due to foreign exchange losses. Net income dropped to 1.17 billion riyals from 3.06 billion riyals a year earlier.

Wednesday, January 21, 2009

Ericsson AB, which cuts 4,000 jobs last year, plans to another round of job cuts this year, this time, about 5,000 jobs are at stake.

The company, the world's largest maker of telecommunications equipment, said the move will cost 6 billion kronor ($717 million) to 7 billion kronor. By second half of 2010, it will lead to annual savings of 10 billion kronor.

According to company's filing to the local bourse, the offer is valued at 28,554 won a share, or 2.46 trillion won (US$1.8 billion) in total.

KT Corp like most phone companies with huge fixed-line assets, are facing declines in revenue as customers are migrating from fixed to mobile.

The merger is expected to be completed on May 18.

Analysts expects the merger to create synergies and would help the company to save costs. However, not all analyst are convinced.

“It is difficult to see where the positive synergies will come from,” Jeff Kahng, an analyst at Credit Suisse Group AG, wrote in a Jan. 8 note. “We are not convinced on the merger having positive impact on bottom-line.”

Interestingly, the proposal, pending shareholders and regulatory approvals, is opposed by SK Telecom and SK Broadband, fearing that it may hurt competition in the market.

Was somewhat surprised when I came across statistics on Russian operators' performance -- not only that they announced their total subscriber base, but they also revealed the location of their customers.

CHINA Mobile Inc, the largest mobile phone company in China, posted a 24.8 per cent increase in subscriber base, to 457.25 million.

China Telecom Corp Inc, which also has fixed-line businesses, registered 208.35 million fixed-line users, of which 44.27 million users are broadband customers. Mobile customer base still far behind market leader. It has about 27.9 million users in 2008.

"This piece of news reinforces our view that earnings dilution exercises would be involved in order to de-leverage its balance sheet. Based on our estimates, an additional 200 million shares will lead to 5% earnings dilution."

Based on data compiled by Bloomberg, 8 of 22 research house placed a Buy call on TMI, another 8 recommended investors to hold on to the stocks, while the remaining 6 placed a SELL call.

Samsung Electronics Co Ltd, one of the largest company in South Korea, said has restructured itself and to streamline its businesses in light of the global economy slowdown.

The electronics giant has reorganised itself into two major divisions. Its chip and LCD units will be merged into one division, while its digital media and telecommunications units will be merged into another division.

The company also announced that executive salaries will be cut by as much as 20 per cent, and also plans to reduce employees' benefits.

It is still unclear if the Samsung will consider spinning off one of its "new" division, into a separate listing entity.

Thursday, January 15, 2009

NORTEL Networks Corp - the telephone equipment maker once worth US$250 billion at its peak - has filed for bankruptcy protection, as it continues to make losses due to competition and weakening economy.

Nortel shares, which closed at a high of C$1,231 ($987) inJuly 2000, fell 27 cents to 12 cents yesterday on the TorontoStock Exchange. A year ago, the stock closed at C$12.89. The stocks have depreciated by 99 per cent in the past year.

Some of the interesting quotes in the Bloomberg report:

“It’s the end of a saga...I’m sad to see it happen but the tears were shed many months ago,” said Benoit Lalonde, vice president of fixed income at Laurentian Bank Securities, a unit of Canada’s seventh-largest bank. Laurentian doesn’t own Nortel debt.

“This is not about the end of Nortel...This is about the beginning of a new Nortel,” Derrick Tay, the company’s lawyer, said at a hearing in Toronto.

MOTOROLA Inc, the second largest mobile phone maker in the US, is cutting 4,000 jobs, so that it can save costs to weather through tough economic times.

The announcement was barely four months since it sent 3,000 employees packing. The current initiative, plus the 3,000 job cut announcement in October, will help the company to save US$1.5 billion this year.

The company lost its pole position in the US to Korean rival Samsung last year, as it could not launch devices that attract phone users.

It aimed to regain lost ground in the segment though, by introducing a touch-screen phone to counter the ever popular iPhone, as well as to launch a "recycled" phone, to attract environmental-concious consumers.

SHAREHOLDERS of KT Corp have approved the appointment of Lee Suk Chae, the former information minister, as its new chief executive officer.

His term will run until 2012.

His immediate task, I guess would be to get the KT-KT Freetel Co merger go through.

KT - the biggest telecommunications company in South Korea, which manages about 90 per cent of the country's fixed-line telephony customers and nearly 45 per cent of broadband users - needs to acquire KT Freetel, its mobile unit, as its traditional fixed-line business is declining.

Tuesday, January 13, 2009

THE Iran government has awarded its third mobile license to a consortium led by Emirates Telecommunications Corp (Etisalat), the biggest phone company in United Arab Emirates, and Tamin Telecom, the telecommunications investment arm of Iran’s social security and pensions department.

Based on report by Bloomberg, the company has submitted a 15-year plan and has gain "exclusive rights" to offer 2G and 3G services for 2 years. It paid US$398 million for the license and plan to be up and running within months.

The country currently has more than 44.4 million subscribers, representing a penetration rate of over 61 per cent.

I think, based on the report, the license will cost the consortium US$398 million during the first two years, and on the third year onwards, the license or spectrum fee will be settled via a revenue sharing scheme.

Thursday, January 8, 2009

NOKIA Oyj has stopped production of N810 WiMAX Edition tablet, its only mobile device using WiMAX technology.

The N810 WiMAX Edition tablet was launched about 9 months ago.

Although the company did not rule out the possibility of launching more WiMAX devices, but it is definitely a blow to the WiMAX ecosystem. This could be also a sign that Nokia is more in favour of the Long-Term Evolution technology, or the company is trying to cut cost amid the global economy slowdown.

Doubt major WiMAX operators will be too worried over this, afterall, main players committed to WiMAX are Intel, Motorola, Alcatel-Lucent etc. Be panic ONLY when Motorola and Intel decides to stop production of WiMAX devices.

Wednesday, January 7, 2009

CHINA issues the much-awaited 3G licenses to China Mobile Ltd, China Unicom Ltd and China Telecom Corp today, a move that could trigger at least few hundred billion yuan in investments over the next two to three years.

China currently is the largest mobile phone market in the world, with more than 611 million mobile subscribers.

According to a spokesperson in the Ministry of Industry and Information Technology, China Mobile will operate its 3G services based on the domestically-developed time division synchronous code division multiple access technology (TD-SCDMA), while Unicom and China Telecom will operate on the wideband CDMA (W-CDMA) and CDMA 2000 services respectively.

Main beneficiaries will be the 3G equipment makers like ZTE and Ericsson.

The Chinese government expects the three players to pump in 280 billion yuan over the next two years, which means about 80-100 billion yuan for each player.

Shares of the three 3G winners declined yesterday, as investors took profit from earlier gains. China Mobile was down by 5.48 per cent to HK$78.45, China Unicom down 10.6 per cent to HK$9.19 while China Telecom Corp fell 5 per cent to HK$3.03.

Tuesday, January 6, 2009

China's largest mobile company China Mobile Ltd will receive the 3G license from its government tomorrow, reported by Sina.Com, without revealing who's the source.

It's also unclear if other operators like China Unicom (Hong Kong) Ltd will receive the license on the same day.

There were many reports on China's 3G plan lately. It was reported that China’s introduction of the high-speed mobile phone services may spur telecommunications companies to spend between 1.8 trillion yuan and 2 trillion yuan over the next 3 years.

Monday, January 5, 2009

VODAFONE Group Plc is close to signing a deal with France Telecom SA's Orange, to share the cost of technology, engineering and maintenance at their UK bases, said London-based newspaper Observer, without citing anyone.

The deal may save the world's largest mobile phone company 1 billion pounds a year.

"Orange and Vodafone already share the costs of running some aspects of their base stations, but the latest agreement goes much further and is expected to include integrating their 3G access networks and possibly a degree of collaboration in managing their international network coverage," the Observer reported.

I wonder if local players like Maxis, Celcom and DiGi are keen into such collaboration?

Verizon Wireless is expected to complete its US$28.1 billion acquisition of Alltel Corp on January 9. Upon completion, the deal will make Verizon the largest mobile operator in the US, overtaking AT&T Inc.

The deal will add almost 14 million customers to Verizon’s subscriber rolls, to about 78 million subscribers.

Acquiring new customers has become more difficult for phone companies as the market saturates, where 84 percent of the population already has wireless service.

Alltel was taken private in 2007 by TPG Inc. and GoldmanSachs Group Inc., which paid $27.5 billion for the company.Verizon will pay $5.9 billion in cash and finance the rest with$22.2 billion in debt.

Friday, January 2, 2009

MAJOR telecommunications companies' share price took a heavy beating in 2008, as investors are not-so-gung-ho over some companies' expansion plans as well as earnings growth potential.

This is how they performed in 2008:

1. China Mobile: fell 43.58 per cent to HKD77.80. It was HKD137.90 early 2008.2. Vodafone Group Plc: fell 25.98 per cent to 139 pence. It was 187.8 pence beginning 2008.3. Telefonica SA: fell 28.67 per cent to 15.85 Euros. It was traded at 22.22 Euros early 2008.4. Deutsche Telekom AG: down by 29.4 per cent to 15.3 Euros. Traded at 21.67 Euros early 2008.5. France Telecom SA: declined by 18.93 per cent to 19.96 Euros, against 24.62 Euros early 2008.6. Bharti Airtel: decreased by 28.2 per cent to 715.5 INR, against 996.4 INR early 2008.7. Singtel: down by 36.25 per cent to SGD2.55, against SGD4.00 early 2008.8. Hutchison Telecommunications International Ltd: Fell by 82 per cent to HKD2.08, against HKD11.72 early 2008. (The decline also due to the HKD7.00 special dividend declared on November 12)9. Telenor ASA: down by 63 per cent to 46.3 Kroners, against 129.75 Kroners early 2008.10. TM International Bhd: down by 53 per cent to RM3.62, against the opening price of RM7.85, when it listed in April 2008.